Rival: ‘Liar’ Sam misused funds
‘It was clear that [Sam Bankman-Fried] lied to his users, his investors, his VC investors, his employees.
— Changpeng Zhao, CEO of Binance
Binance CEO Changpeng Zhao, a key player in the collapse of rival crypto exchange FTX, called Sam BankmanFried a “liar” who knowingly misappropriated customers’ money.
“Sam knows that he was using the user funds to do trading for Alameda,” Zhao said, referring to FTX’s sister analytics firm that was run by BankmanFried’s sometime girlfriend Caroline Ellison.
“He has been probably doing this for quite a while and nobody else knew until very recently,” added Zhao during an interview Thursday on CNBC. “I’m just shocked. I didn’t know that he lied to everyone a week ago.”
Zhao said that while he supports tighter regulation of the crypto industry, it is unlikely that more oversight would have prevented FTX’s collapse.
“When a person lies, when there is a bad player that just wants to do bad things, regulations do not prevent it,” he said. “Banning guns doesn’t mean no one will take a gun and shoot somebody.”
Zhao’s company was in talks to buy out FTX but then pulled out and sold its holdings in FTT, the digital asset created by FTX, sparking a $6 billion run on the crypto exchange in which customers frantically sought to pull their deposits.
Now Bankman-Fried finds himself in hot water after it was discovered that FTX was using customer deposits to make risky bets using sister investment firm Alameda Research.
Zhao said that when his company looked at FTX’s books, a problem was apparent.
“It was pretty clear pretty soon that there was a misappropriation of user funds,” Zhao told CNBC’s “Squawk Box” on Thursday. “The user funds were gone.
“It was clear that [Bankman-Fried] lied to his users, his investors, his VC investors, his employees,” Zhao said.
Bankman-Fried apologized for how things turned out and that his company “got overconfident and careless,” in a tweet Wednesday.